Correlation Between Monumental Minerals and McEwen Mining

Can any of the company-specific risk be diversified away by investing in both Monumental Minerals and McEwen Mining at the same time? Although using a correlation coefficient on its own may not help to predict future stock returns, this module helps to understand the diversifiable risk of combining Monumental Minerals and McEwen Mining into the same portfolio, which is an essential part of the fundamental portfolio management process.

By analyzing existing cross correlation between Monumental Minerals Corp and McEwen Mining, you can compare the effects of market volatilities on Monumental Minerals and McEwen Mining and check how they will diversify away market risk if combined in the same portfolio for a given time horizon. You can also utilize pair trading strategies of matching a long position in Monumental Minerals with a short position of McEwen Mining. Check out your portfolio center. Please also check ongoing floating volatility patterns of Monumental Minerals and McEwen Mining.

Diversification Opportunities for Monumental Minerals and McEwen Mining

0.1

Correlation Coefficient

Monumental Minerals  McEwen Mining

Average diversification

The 3 months correlation between Monumental and McEwen is 0.1. Overlapping area represents the amount of risk that can be diversified away by holding Monumental Minerals Corp and McEwen Mining in the same portfolio, assuming nothing else is changed. The correlation between historical prices or returns on McEwen Mining and Monumental Minerals is a relative statistical measure of the degree to which these equity instruments tend to move together. The correlation coefficient measures the extent to which returns on Monumental Minerals Corp are associated (or correlated) with McEwen Mining. Values of the correlation coefficient range from -1 to +1, where. The correlation of zero (0) is possible when the price movement of McEwen Mining has no effect on the direction of Monumental Minerals i.e., Monumental Minerals and McEwen Mining go up and down completely randomly.

Pair Corralation between Monumental Minerals and McEwen Mining

Assuming the 90 days horizon Monumental Minerals Corp is expected to generate 5.7 times more return on investment than McEwen Mining. However, Monumental Minerals is 5.7 times more volatile than McEwen Mining. It trades about 0.04 of its potential returns per unit of risk. McEwen Mining is currently generating about 0.0 per unit of risk. If you would invest  5.50  in Monumental Minerals Corp on August 31, 2024 and sell it today you would lose (2.00) from holding Monumental Minerals Corp or give up 36.36% of portfolio value over 90 days.

Time Period	3 Months [change]
Direction	Moves Together
Strength	Insignificant
Accuracy	100.0%
Values	Daily Returns

Monumental Minerals Corp  vs.  McEwen Mining

Monumental Minerals Corp

Risk-Adjusted Performance

3 of 100

Insignificant

Compared to the overall equity markets, risk-adjusted returns on investments in Monumental Minerals Corp are ranked lower than 3 (%) of all global equities and portfolios over the last 90 days. Despite nearly fragile basic indicators, Monumental Minerals reported solid returns over the last few months and may actually be approaching a breakup point.

McEwen Mining

Risk-Adjusted Performance

0 of 100

Very Weak

Over the last 90 days McEwen Mining has generated negative risk-adjusted returns adding no value to investors with long positions. In spite of fairly strong basic indicators, McEwen Mining is not utilizing all of its potentials. The latest stock price disturbance, may contribute to short-term losses for the investors.

Pair Trading with Monumental Minerals and McEwen Mining

The main advantage of trading using opposite Monumental Minerals and McEwen Mining positions is that it hedges away some unsystematic risk. Because of two separate transactions, even if Monumental Minerals position performs unexpectedly, McEwen Mining can make up some of the losses. Pair trading also minimizes risk from directional movements in the market. For example, if an entire industry or sector drops because of unexpected headlines, the short position in McEwen Mining will offset losses from the drop in McEwen Mining's long position.

The idea behind Monumental Minerals Corp and McEwen Mining pairs trading is to make the combined position market-neutral, meaning the overall market's direction will not affect its win or loss (or potential downside or upside). This can be achieved by designing a pairs trade with two highly correlated stocks or equities that operate in a similar space or sector, making it possible to obtain profits through simple and relatively low-risk investment.

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Note that this page's information should be used as a complementary analysis to find the right mix of equity instruments to add to your existing portfolios or create a brand new portfolio. You can also try the Price Transformation module to use Price Transformation models to analyze the depth of different equity instruments across global markets.